2013 (10) TMI 735 - AT - Service Tax

Appellate tribunal upholds service tax assessment, denies penalty waiver, grants pre-deposit waiver, and stays proceedings.

The appellate tribunal upheld the assessment of service tax by the adjudicating authority, including the appropriation of remitted tax and dropping a ... Penalty u/s 78 - service tax and interest was deposited before issuance of show cause notice - Service from foreign service providers - Held that:- waiver of pre-deposit of penalty and stay all further proceedings pursuant to the adjudication order, for realization of the liability, pending disposal of the appeal. Stay application is disposed of accordingly - Decided against assessee. Issues:Assessment of service tax, appropriation of remitted tax, liability under reverse charge mechanism, imposition of penalty under Section 76, waiver of penalty, stay of proceedings.Assessment of Service Tax:The adjudicating authority assessed a service tax amount and appropriated the remitted service tax along with education cesses and interest prior to the show cause notice issuance. They also dropped a specific demand related to services received from foreign providers. The appellate authority upheld the decision, leading the petitioner to challenge the penalty imposition.Appropriation of Remitted Tax:The authority appropriated a portion of the remitted service tax, which the petitioner had paid before the show cause notice. Despite this, the penalty under Section 78 was not waived due to alleged willful suppression by the petitioner. The petitioner contested this decision, emphasizing the remittance of the tax liability and non-disputed nature of the liability.Liability under Reverse Charge Mechanism:A demand under the reverse charge mechanism for services from foreign providers was dropped by the adjudicating authority. This decision was part of the overall assessment of the service tax liability and subsequent actions taken by the authorities.Imposition of Penalty under Section 76:The adjudicating authority eschewed the imposition of penalty under Section 76, which was a relief for the petitioner. However, the refusal to grant waiver of penalty under Section 78 led to the petitioner challenging this decision before the appellate tribunal.Waiver of Penalty and Stay of Proceedings:The petitioner sought waiver of the penalty and stay of further proceedings pending the appeal. The tribunal found the petitioner's case arguable and granted waiver of pre-deposit of penalty. All further proceedings for realizing the liability were stayed until the appeal's disposal, providing temporary relief to the petitioner.This judgment highlights the intricate process of assessing service tax liabilities, appropriating remitted amounts, addressing liability under reverse charge mechanisms, and the nuanced considerations surrounding the imposition of penalties under specific sections. The tribunal's decision to grant waiver of penalty and stay further proceedings showcases a balanced approach to addressing the petitioner's concerns while upholding legal principles.